Indonesia’s Palm Oil Export Ramps Up Under New Proposal
Efforts to restart Indonesia’s palm oil export are underway
The Republic of Indonesia is setting into motion a new policy that will drive an export impetus. According to the Ministry of Trade‘s recent regulation, Indonesia’s palm oil export will be resuming once again. This trading activity will also undergo acceleration following the recent three-week ban on palm oil exports.
The acceleration initiative by the Indonesian government aims to maintain stability, especially in the palm oil production sector. It will also focus on enabling steady pricing for fresh palm fruit bunches at the planters’ levels.
The regulation, newly signed on June 7, will allow the acceleration scheme to operate until July 31, 2022. Effective immediately, the plan is to ship a million tonnes of crude palm oil and its derivatives. The regulation also facilitates a larger shipment quota as and when the need should arise.
Disruptions in Supply and Demand
Due to global insecurity over vegetable oil supplies, local prices began spiralling along with a shortage of cooking oil. The government was able to stablise the situation by imposing a three-week ban on Indonesia’s palm oil export. As the top palm oil producer in the world, the export ban was a necessary move for Indonesia.
However, the lifting of the export ban comes with a domestic sales condition that is slowing trade down. This condition makes local palm oil sales a prerequisite for traders to receive their export quota.
As a result, shipments are tardy as requirements place constraints on exporters that prioritise domestic supply. Local farmers are also struggling to sell their palm fruits as storage tanks at mills are at maximum capacity. This local blockage continues to impose a sluggish outlook on consignments.
Conversely, the government is rolling out other measures to speed up trade activity and promote shipments. This includes reducing crude palm oil levies and export tax limits to USD488 per tonne. Currently, the maximum rate is USD575 per tonne.
Resuming Global Palm Oil Exports
Indonesia’s palm oil export ranges from 2.5 million to three million tonnes on average. With this trade activity resuming from May 23, the government hopes to return to these figures soon. Companies seeking to be part of this acceleration scheme must adhere to the Trade Ministry’s requirements. This includes providing information such as storage inventory and other data on the Ministry’s online platform.
Entrepreneurs seeking assistance in navigating the Indonesian business scene are welcome to contact 3E Accounting Indonesia. As an award-winning and reliable enterprise solution provider, 3E Accounting specialises in providing local expertise from global professionals.
The new business model requires one-stop, comprehensive solutions that cater to all the needs of a savvy entrepreneur. From selecting and incorporating the right Indonesian business entity to traversing the local laws, we’ve got your back. Get in touch with 3E Accounting Indonesia for customisable packages that will seamlessly meet every budget.